What is mortgage application 1003?
Mortgage Application 1003, also known as Uniform Residential Loan Application, is the standard form used by almost all mortgage lenders in the United States. This basic form, or its equivalent, Form 65, is completed by borrowers when they apply for a loan. mortgage. While some lenders may use alternative forms or just accept basic borrower information about their finances, property type, and value, the vast majority of lenders rely on Form 1003.
Key points to remember
- The 1003 Loan Application, or Uniform Residential Loan Application, is the standardized form used by most mortgage lenders in the United States.
- It is required by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. for mortgages they buy from lenders.
- The app asks questions about the borrower’s employment, income, assets and debts, as well as property information.
- Form 1003 is typically completed twice in the mortgage process: once on initial application and once on closing.
The loan application form 1003
Loan Application Form 1003, also known as Uniform Residential Loan Application, was developed by the National Federal Mortgage Association, or Fannie Mae, as an industry standard form. Fannie Mae and her sister, the Federal Home Loan Mortgage Corp.., or Freddie Mac, are loan companies created by the United States Congress to maintain liquidity in the mortgage market.
Fannie Mae and Freddie Mac buy mortgages from individual lenders and hold the loans in their own portfolios or sell them to other entities as part of a Mortgage Backed Securities (MBS). By selling consumer mortgages to these federally backed entities, lenders retain the cash needed to continue offering new loans.
Mortgages must be documented in the manner prescribed by Fannie Mae and Freddie Mac. Since both require a Form 1003 – or its Freddie Mac equivalent, Form 65 – for any mortgage they plan to purchase, it’s easier for lenders to use the correct form at the start rather than trying to transfer information from a proprietary form to a 1003 when it comes time to sell the mortgage.
Typically, borrowers must complete a Form 1003 twice during a mortgage transaction: once on initial application and a second time at closing to confirm loan terms.
What information is needed on Form 1003?
Form 1003 is intended to collect all the information a mortgage lender needs to determine if a potential borrower is worth the risk. Although some lenders do not require employment information to consider a new mortgage, Form 1003 asks for at least two years of employment history, including monthly income.
Form 1003 also requires the borrower to note any other household income, along with a detailed list of their assets and liabilities.
A borrower’s assets include anything that could be used or liquidated to cover loan payments:
- Life insurance policies
- Chequing and savings accounts
- Stocks, bonds, mutual funds or other investments
- IRA, 401 (k) or similar retirement accounts
Lenders should also be made aware of any other debts the borrower may be responsible for (in addition to mortgage payments), such as car loans, credit card debt, student loans, or open collection accounts.
If the borrower owns other property, whether as an investment or as a second home, Form 1003 requires disclosure of those assets and any mortgages associated with them.
Additionally, Form 1003 asks for information about the property the borrower wishes to purchase with the new mortgage.
1003 Application example
Mortgage Application 1003, or Uniform Residential Loan Application, was redesigned on May 31, 2021. It currently consists of nine sections, as follows:
Section 1: Borrower Information. This includes your personal, employment and income information.
Section 2: Financial information – Assets and liabilities. Here, you list your savings and investments (including names of financial institutions and account numbers) as well as any unpaid debts and other financial obligations, such as alimony or child support.
Section 3: Financial Information — Real Estate. This is where you list all the other properties you currently own, along with what you owe (if any) about them.
Section 4: Loan and Ownership Information. Here you describe the property for which you are looking for a mortgage. If this is a rental property, the form asks you how much you expect to receive in monthly rent.
Section 5: Declarations. This page asks a series of questions about ownership, how you pay for it, and other aspects of your finances.
Section 6: Acknowledgments and Agreements. This is the page you sign, attesting that the information you provided is correct and authorizing the lender to perform credit checks and other investigations.
Article 7: Military service. If you currently serve or have served in the United States Armed Forces (or had a deceased spouse who did), you’ll note it here.
Section 8: Demographic Information. This section asks for your ethnicity, race and gender. Federal law requires these questions to be on the application, but they are optional for the applicant, and you can indicate that you do not wish to answer.
Section 9: Creator of the loan. This is a section that the lender fills out.